BAE Systems

Indisputably murky

The dense terrain where BAE Systems meets Saudi Arabia is now a little clearer. Despite denials on many details, a great deal is not in dispute. There are conflicting accounts of the status of the Saudi bank account into which £1bn was secretly transferred. But no one is disputing the fact of the payment, its scale or its linkage to Britain's biggest arms contract. The attorney general has denied personally directing that the payments should be concealed from the OECD, but he has not said that he knew nothing about the payments; nor has he disputed that important evidence was kept from the anti-corruption watchdog by officials working for two departments for which he is responsible - his own office and the SFO. No one disputes, either, that a flow of fees continued after 2002, when it became illegal in Britain to pay commissions to foreign officials.

The response of the establishment - including the Conservative opposition, which is itself heavily implicated - has been a world-weary shrug of the shoulders. The prime minister, who has been candid in admitting de facto if not de jure responsibility for halting the police inquiry into the affair in December, seems to share this view. He is obliged, by anti-corruption treaties, to explain the move in security terms; but he always adds the argument - as he did again on Thursday - that British jobs were at stake.

Were BAE to lose contracts there would be an immediate hit on employment and indeed profits. The concern extended to this single firm - concern that reportedly took the defence secretary to Riyadh last week - sits oddly, however, with Gordon Brown's view that industrial policy must "reject special privileges". New Labour has achieved prosperity by allowing employment in many manufacturing firms to dwindle while those in the vibrant service sector increased. In other circumstances ministers would argue that subsidising jobs in the arms-export industry (by one estimate to the tune of £13,000 per year each) would jeopardise, not promote, prosperity.

The threat to the flow of foreign intelligence is particularly suspect. Mr Blair suggests the Saudis would respond to British exposure of any corruption on their part by severing intelligence links. But that lacks credibility, as MI6 sources told the Guardian in January; to sever the intelligence flow from Riyadh to London would also mean stopping the flow from Riyadh to Washington. And that would never happen. No regime is more threatened by al-Qaida than the Saudi kingdom itself. Neither the economic nor the security considerations hold water. It is only a twisted notion of the national interest that has been advanced by this sorry saga.

BAE, Europe's biggest arms company, claims there is 'no evidence' that it has engaged in massive corruption to sell arms overseas.
David Leigh and Rob Evans have published the evidence and documents gathered round the world in support of those allegations. Readers can judge for themselves.